What does the auditor exercise throughout the audit of Cinnaholic's financial statements?

According to Cinnaholic's 2025 Franchise Disclosure Document, the auditor exercises professional judgment and maintains professional skepticism throughout the audit of the company's financial statements. This means the auditor must use their expertise and experience to make informed decisions during the audit process and maintain a questioning mind, critically assessing the information provided by Cinnaholic. This approach is essential for ensuring the accuracy and reliability of the financial statements.

In addition to exercising professional judgment and skepticism, the auditor's responsibilities include identifying and assessing the risks of material misstatement of the financial statements, whether due to fraud or error. They design and perform audit procedures responsive to those risks, including examining evidence regarding the amounts and disclosures in the financial statements on a test basis. The auditor also obtains an understanding of internal control relevant to the audit to design appropriate audit procedures, though they do not express an opinion on the effectiveness of Cinnaholic's internal control.

The auditor evaluates the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as the overall presentation of the financial statements. Furthermore, the auditor concludes whether there are conditions or events that raise substantial doubt about Cinnaholic's ability to continue as a going concern for a reasonable period of time. These procedures are aligned with auditing standards generally accepted in the United States of America (GAAS).

Finally, the auditor is required to communicate with those charged with governance regarding the planned scope and timing of the audit, significant audit findings, and certain internal control-related matters identified during the audit. This communication ensures transparency and provides an opportunity for those charged with governance to address any concerns or issues raised by the auditor.